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Ever since the UFC’s parent company, WME-IMG, announced that they were planning a public stock offering back in the spring, the watchword from financial advisors has been ‘caution.’ The corporate entertainment giant that Endeavor has become is laden with debt, largely due to their aggressive acquisition of sports and media organizatons like the UFC.

Initially set to go public earlier this year, Endeavor delayed their stock offering over the summer to finalize the acquisition of OnLocation Experiences—which offers VIP-style packages for sports events and concerts, among other things. However, they sounded like they were finally ready to hit the stock market this week, with an IPO set to go public early Friday, September 27th. In the weeks leading up to the offering, the LA Times reported that Endeavor had hoped to raise somewhere in the neighborhood of $600 million dollars, at a share price of $30-32.

The New York Post reported on Wednesday that those expectations may need to be scaled back somewhat. Endeavor recently released their ‘road show’ video package, meant to entice potential investors. But, according to the Post, the response has been less than electric. “It was not received well,” a source was quoted as saying, of the company’s presentation. And while some insiders were quoted as doubting that Endeavor would pull their IPO as a result of its poorer than hoped reception, the Wall Street Journal now reports that that’s exactly what has happened.

A lack of excitement around Endeavor’s offering was expected to push their stock as low as $25-26 a share, or closer to $484 million for the ~19 million shares.

Posting Machine

The big take aways from all this is that the UFC is the most profitable part of WME, their debt load is ridiculous and larger than thought, and they have a currently have a "B" credit rating from Standard & Poor's which is not good at all. While not toxic, it signals to investors and loaners that they're kind of a coin flip, and anything below a BBB is gonna be at least a bit problematic. Also, apparently they barely own half of the UFC directly, I don't know how well known that was.

Here's how it effects the UFC: WME wants a lot of fucking money as quickly as possible, not just to get breaks on low repayment (I thought this was really fucking stupid and short-sighted), but because their entire business may get seriously damaged if they don't. High-level talent agents could jump ship. High-level executives could jump ship if it gets bad enough.

So their stupid booking that paints divisions into corners and unnecessarily ruins older stars, and their double paywall bullshit because ESPN was willing to overpay in exchange for the UFC building up ESPN+ wasn't just because WME is shortsighted, it's because they're somewhat desperate. They make these trades in long-term viability and long-term growth for the sport because they are so focused on the present.

They are being used to build ESPN+ because it makes more money in the short term, while fucking themselves over in the long-term.

Hell, they may even do a short-term extension with Reebok simply for appearances to outside investors (which would have to be for an undisclosed pittance at this rate, since I doubt Reebok would agree to anything more). I really hope they're not this stupid but they've not given reason to think otherwise.

Do you want to bet against me?

The big take aways from all this is that the UFC is the most profitable part of WME, their debt load is ridiculous and larger than thought, and they have a currently have a "B" credit rating from Standard & Poor's which is not good at all. While not toxic, it signals to investors and loaners that they're kind of a coin flip, and anything below a BBB is gonna be at least a bit problematic. Also, apparently they barely own half of the UFC directly, I don't know how well known that was.

Here's how it effects the UFC: WME wants a lot of fucking money as quickly as possible, not just to get breaks on low repayment (I thought this was really fucking stupid and short-sighted), but because their entire business may get seriously damaged if they don't. High-level talent agents could jump ship. High-level executives could jump ship if it gets bad enough.

So their stupid booking that paints divisions into corners and unnecessarily ruins older stars, and their double paywall bullshit because ESPN was willing to overpay in exchange for the UFC building up ESPN+ wasn't just because WME is shortsighted, it's because they're somewhat desperate. They make these trades in long-term viability and long-term growth for the sport because they are so focused on the present.

They are being used to build ESPN+ because it makes more money in the short term, while fucking themselves over in the long-term.

Hell, they may even do a short-term extension with Reebok simply for appearances to outside investors (which would have to be for an undisclosed pittance at this rate, since I doubt Reebok would agree to anything more). I really hope they're not this stupid but they've not given reason to think otherwise.

The UFC has already been impacted by the short-term thinking of Endeavor as you say - these developments don't impact the UFC much.

The ESPN deal has already essentially locked in revenues and obligations and the only way they can squeeze more out of it short-term is by cutting costs and doing shit like the new Reebok deals. They can't do much dramatically with the UFC now to address their bigger issues, as they've already done that.

People don't want anything to do with Endeavor because of the combination of its financial position and the structure of its operations. It's an incoherent, dog's breakfast of a company. Does it sound like a great idea to invest in a debt-laden company that's got bull riding, cage fighting, streaming services and talent management thrown randomly in together?

You're just betting on them having random luck with unrelated businesses, with no prior indication that they are capable of organising their diversified assets in a way that the risks of losses in one unrelated industry are offset by gains in multiple others.